tv Street Signs CNBC August 15, 2014 2:00pm-3:01pm EDT
welcome to the "street signs." live from the floor of the new york city, stocks still selling off. have opened attract on russian armored vehicles. the open stocks are up as high as 16,775. right now we are much lower than that. in fact down 107 points. throughout the hour we will be hitting every single angle of this market. >> indeed we will. let me run you through some of the reactions. it gave gold an initial --
downed ever so slightly. >> let's move on. immediately sank to a new low. it's just a little touch above that right now. take a look at the german -- and by the way, two and three years of negative. the vix currently at 14.4. but you know what? the long-term average. and change, remember, russia is a major oil and gas producers. it was the lower since january. down 6% in the last four years, so we'll explore where full prices will go. much more later on in the show.
brian, over to you. so leave us get the latest. we are joined be -- michelle caruso-cabrera, and michelle, we know the basic headlines. what also seems to be out there, though, is russia saying we don't even have troops in that part in the world here. >> it's tough. ben, defiles about -- russia says, yes, my mike is on. sorry. there we go. russia says that it has sent no military equipment into ukraine it was this event.
their artillery had explained -- that had crossed into ukraine during the night. he spell we lent it go deep there's production on the other side, so technically, we waited for them to come in, but then we destroyed them. humanitarian add. coming from moscow as well. . what was supposed to be 280 trucks filled with things like water, baby food, emergency aid. traveling with the convoy that you see there. s while they were out with the convoy, shawn walker of "the guardian" said just saw a column
of apc, armored personnel carriers and vehicles with official russian military plates cross the border into the ukraine. he sent out those tweets 23 hours ago form the alleged attack, which we don't have evidence of. and when we heard the announcement is when the markets started to fall. here's the basic point, mandy and brian. if indeed this has occurred, we now have ukrainian military facing off with russian military deep into ukrainian territory. so now, how are the reductions going to deny this if we have proof of the vehicles? is this going to force the europeans to do anything. >> let's do some barry mccaffery, nbc military analyst. general mccaffery, let me get to
you first of all. you have gone on many missions, so you have a very good feeling of what happens on the ground there. what do you think will be the next move, if any, by president putin? it seems we have drawn a red line. the europeans don't, or the military power. i also think without question, if the ukrainian military actually trying to recap kurd they rebellious urban areas. the russians will, without question intervenes. so it's a tricky situation. the russians do. >> general ultimately is the only leverage that ukraine might have the support of the west?
no, i don't think so. i think to actually try to recapture. request the russian-speaking people. the russians across the border probably have -- they already have special ops unit with technology, but i think they're make an overt military intervention if this el start killing -- they're right on the verge of doing that. use this as -- >> i think that's a big concern here. it could be spoiling for a fight. any sort of crackdown on ethnic russians in eastern ukraine, as
they -- as ukrainian forces squeezed donetsk and luhantz. this could be a replay of what we saw in crimea. the odds are -- we know there's already been some fighting, what could dial back this -- we can't just anticipate the worse. >> and that's what we're hoping for. peace is better than war. >> you know, i think the talk of this meeting in berlin, where the russians are coming, ukrainance are coming, i think the germans are hosting. >> and the french. >> so this is a possibility. diplomacy, an opportunity to talk. russians are probably in a position to have some leverage here.
and that may help calm things done. a very important meeting. it certainly hopes to some kind of agreement, but you were saying the eu political, economically and militarily speaking, lacks the tools to confront putin. where does the u.s. stand in all of this? well, one thing i'm fairly sure of. you eye cranance would have to be mad to take on the russian military. i ape hopeful the diplomatic meeting in berlin will have the eye koranance say we better halt the advance. at the end of the day the u.s. if it was poened will, we would. we would actually -- possibly
the baltic state, but not the ukraine. i think putin is able to read this situation quite nicely. he's supported by his own domestic political pin. i think the ukrainance will have to back off or fear the wrath of the russian military. >> general mccaffery, peter brooks, thank you both very much for your insight. we appreciate it. on deck, as nerves grow, borrowing costs continue to fall. pimco's bill gross is here. to take on stocks, and advice you cannot miss. there he is. stick around. (vo) rush hour around here
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the u.s. ten-year yield sinking to the lowest. >> you know, while there is eliciting much discussion here in the newsroom, perhaps of even greater discussion is how much and how fast german bunds have fallen. my question is why u.s. investors should care? . >> i think they should care, because there's a relative value trade. really referenced and highlighted that dynamic. if you're an investor, and i understand there's currency issue regarding changes in the value of the dollar or the euro, but for all practical purposes, when you take a eurozone five-year, you have to multiply it by seven. i say enough said, investors should probably go for the higher yield, and what's more,
if you look at total return, total return year to date, it's over 8% as of yesterday on the ten-year, a little over 18% as of yesterday's close on a 30-year bond. today's action will just p usual those numbers even farther. i continue to say as i have all year, it doesn't matter what the catalyst is, we've carved out this move starting on the first trading day in january and the more geopolitics play in, the more they will push the timeline a bit faster. that's probably the best of bund explained in a long time. certainly is a big story. many having calling for higher yields. remember, most mortgages are priced off that ten-year rate,
which means they are likely to go lower. bill, i know, listen, i don't know what you guys are drinking out there in southern california. basically the united states and north america is the only decent 2 to 2.5% growth area in the world. so yields are coming down because not only growth, but inflation is very, very low. >> so take out russia, ukraine, take out isis, israel, gaza.
where would the yield on the ten-year be if the world were at complete peace, but the economic situation were the same? >> i think perhaps a bit higher. we have five or ten basis points today based on gee on politics, but the geopolitical situation is not just important in gaza, iraq, syria and other places, but in ukraine and russia, because it's exacerbating a regional conflict in terms of trade. what does that do? it slows growth, yes, but also produces increasing lieutenants of deflation and euroland, to the extend that happens, the german bund declines, and the u.s. ten-year at 233 looks a bit better. so it's all sort of correlated. in exacerbated, as i said, by geopolitical -- >> let's get to those tensions
that brian just took out and put them back into the equation to the reality we are facing right now. how low do you think the ten-year goes? >> well, i don't think so. i think the u.s. is still growing at 2.5% in the third yar. inflation is approaching 2%, so an investor has to be cautious in terms of investing money for ten years. even with the u.s. treasury at 2.33%, if inflation is the start of the federal reserve and 2% is that number, so 2.33% is the full value in our opinion. it doesn't mean that we're selling, but does mean an investor in real terms, you know, is bakley going to break even with inflation if they're buying treasuries. you are known for bonds. are you surprised by the strength and resiliency of the u.s. stock market?
no, because we've talked about this before. we've talked about the new neutral, the policy rate, the fed funds rate will be elemented on the up side as the fed proceeds along its path in 2015, '16 and '17. the old normal, the old neutral basically was 4% back in the day. these days, however, with slow global growth and structural headwinds and geopolitical tensions and trade wars, you know, limits the fed funds and the policy rate of 2%. what does that say for stocks and risk assets? it basically sets a new parameter, a new floor or ceiling, i guess, in terms of the policy rate, such that dividends are discounted back, you know at a much lower rate. which mean a higher price and higher p.e. we can enjoy these stock prices at they levels with p.e.s at 15,
16, 17 times based on what we call the new neutral. >> if we do take the view that all of they events have the potential to stall on slow down global economics, how much pressure do you think takes off the fed well, the fed always said that gee os political cat terrence are not their primarily concerned. it's fair to says to your point, in the fed minutes every month there are mention of geopolitical tenses, so the northwesterly bank is aware of potential trade conflicts to reduce economic growth. not just in injure your -- in 2
certainly will hold and that they may in fact delay racing interest rates beyond june of 2015, which is the estimated target at the moment. >> bill, in the investing world that is the global mall of america, if you will, do you have one single asset or asset class that you love right now? >> i lie closed-in bund funds. they have the advance, to some extent of borrowing 'have the low levels of interest rates perhaps 10 or 15 basis points. high quality, longer term investments. currently in terms of its yield. so gross is a personal investor, as investing in high-quality closed-in funds, and, you know, if pimco could do it, we would
the escalation of the ukraine crisis is weighing on the markets today. at one point the do you was up by 61. now we are firmly in the red. we have been tracking russia media to get a very close look. joining me more is zena. >> you would think this -- the main story was the exact opposite. during a 30-minus cast, on the 20th manipulate there was a mention of the alleged confrontation. they say there's no military convoy in ukraine, no surprise there, the security service saying there's no russian troops. but what the russian media is focusing on is what they call a humanitarian catastrophe in ukraine against russian speakers there. there are russian speakers
living in many countries in the world, not just in ukraine, so them using that as a guise to go into possibly to intervene is scary stuff. >> really playing up the humanitarian side. immediately moscow sudden ukraine was trying to sabotage the delivery of aid. >> the russian media is focusing on saying, like, we want to invite interinitial journalists to examine they humanitarian convoy sis,ened a the second thing is they're saying that the ukrainian military is killing their own people. they want during the newscast. this phosphorus bombs are being dropped on its own citizens, they say. so it gives us a taste of since putin controls the message, of what he really is thinking. >> he really does control the message. what is the feeling of the russian people right now towards putin. are they seeing nim a great are or lesser light? are they bakley seeing him in
the light he wants them to see him in. >> you think that's pretty much it. his number are through the roof right now, approval rating something like 87%, a lot of the old are population may just get their news from russian state tv. there are very, very few alternative channels. most people who are most educated, westernized, they go to the internet to get an alternative look at the what the rest of the world is saying. >> it depends on where they are. where they are in the world and where they are in russia, but again, the older population really focusing on the newscast, and what they're thinking is despy the fact that prices are up for them, is russia going to win or lose? >> what my sources is saying is this is a win/win for russia. if russians are attacked, the russians can say, you know what? we have to go in, have to protect our own people. if not, they can continue to supply the aid to the rebels,
which are facing a lot of resistance right now, by the way. >> thank you so much for monitoring that for us. i hope you will continue to do that. dina gozovski. great stuff. we're lucky to have her among or team. >> we certainly are. we're also very lucky to have courtney reagan here today as well. your approval numbers are through the roof, from what i understand. welcome it's been a slow week. there's another reason, a little bit crazy today. >> we have some options expirations, and we're going into a summer weekend. how much do they feel they might need. do we want to be short or pare back gains, so i watched that last hour, because you'll see some big decisions being made there.
we're seeing financial selling off, and bank of america trade lower form moving lower, before, of course continuing to move higher. and oil stocks moving higher on that. bad week for many things, but a really bad week for two particular groups, european markets. and your favorite, the retailers. what's funny, j.c. penney, when they came out with the numbers bert than expected, i got some nasty grams from graham, saying see, sullivan, i told you the stock was going to soar. >> that was even way before the ukraine news happen. it was fairly flat. i was a little surprised, too, i thought we would see a surge. we saw huge moves.
again, i think there is a worry about the consumer and the discretionary sector. if they are spending, where are they spending? it's a hard area to do smart picking. and then about what's going on in europe, german,posting its contraction. supposed to be one of the strongest players out there. >> and let's hope it's not a race to bottom. courtney reagan rgets thank you very much. >> mandy, because to you. >> we the consumer all win, right? 40% off is just standard. let's take a look at how oil is getting impacted today. we'll be back with the fundamental side and the technical side and some extra analysis as well. "street signs" is back straight after this break. new car smell and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling.
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ukraine. e6 pavel, and rich on the technicals. pavel, trying to piece together ukraine, russia, obviously with the move in wti, which is here in america, we're not talking brent, please help us understand the move. >> look, i -- to be clear, the conflict in ukraine does not physically threaten any oil supply. the risk is if the sanctions against russia, which have already been impulsed get intensified, tightened to perhaps go all the way to an oil embargo like the one against iran. that's very hard to imagine. russia is one of the top three oil producers. it would be an absolutely to physically ban russia from exporting barrels, and frankly that's not even all that realistic, considering how much
russian oil goes to places like china and other asian countries, but that is the fear. again, there is no physical disruption to an oil supply based on fighting in eastern ukraine. >> do you expect any problem? any reaction by, let's sea exxon, which just last weekend began drills in the arctic? >> no, i do not expect any reaction unless there is a specific policy response by western government. so your reference that exxon -- well, that well is using equipment. that was already in the country, so that is exempt from the restriction on technology transfer that were imposed by the u.s. and eu, so the u.s. is in within perfect rights to drill that well unless some other policy change in terms of sanctions get passed by
washington or -- >> let's go down to the technicals. rich ross, how does oil stack up technically right now? >> brian, don't let geopolitics getting in the way of a nice set up. prices are going lower. let's look at the charts, i'll show you why. for most of the year, we chopped sideways in a fairly orderly way, but we put in the head and shoulders top and recently we break below the neckline, the 200-day moves average and key psychological level. we settle into a bearish flag, which should be a continuation pattern, all of that should take us down to the lows we saw earlier this year, but the chart i'm really focusing on today, brian is the longer-term weekly chart. if you bring it up, i'll show you exactly why. look at that 200-week moving average. it sure seems to work here in wti. over the last three years we've tested it on three occasions, in fact breached it on three
occasions, each time proved to be a nice buying opportunity, albeit with a little more weakness. i think history repeats here. i think we have a few dollars lower here, probably about four, five dollars down, then a little recovery bock to that 200-week moving around. short term there's more pain here in wti. it goes much lower. >> rich, pavel, thank you very much. in partnership withia hoo finance, posted by the terrific mandy drury today. >> yours truly. cnbc's policy you lard million dollar home is back with a twist. this time money is no object. would that be nice? we can all dream for a second. we'll be showing you the most expensive houses that we can get into. the megamansions are battling to see which one is the best bang for your buck and you, folks, will determine the inwinning, this time pious pad takes on a new challenger manly digs. you with go to cnbc.com/vote and
vote for your favorite in real time. the winner moves on to the next round. we're keeping the location of each home a seek cent until after we get a look. here is the million dollar matchup. >> welcome to the ultimate bachelor pad. a manly mansion that sits on a third of an acre. 7500 conveyor feet, and views from almost every room. plus a spacious kitchen, equipped with stainless steel appliances. and this spiral scarecase or take the main stairs. the railing is made from a rolls-royce exhaust pipe. and there's also an elevator. there are four bedrooms and three bathrooms. not to mention a two-floor garage. these digs for $2,900,000.
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but also dawn, tell us where are the homes located? am i lowed to have a guess first if i really have no idea, except with the manly digs, clearly it's not tropical, not on the beach, maybe in the middle a city somewhere. somewhere in the midwest? >> you've got it. it's kansas city, missouri. >> that i would never have picked. >> no, most of us wouldn't have picked kansas city, missouri for too much, but you're absolutely right. >> pious pad, that one is columbus, ohio? >> it is, a big metropolis. >> they're both year-round living, which is terrific. they're both close to the same price point, 3.9 versus 2.9. the 3.9, of course, has 3 1/2 acres, where the 2.9 had a third
of an acre. so that's a huge difference. >> really is. but also, of course, the smaller one, small acreage has small taxes, 16,000 a year versus almost 60,000 a year. huge difference. >> and people when they buy a home, they look at the price to start with. they don't necessarily think holistically. all ongoing things. >> and the lawn mowing, the peel upkeep, forget it. >> and also the convent outs is so gorgeous and so special. i think it's probably a unique house. i haven't seen anything like that anywhere else. it's absolutely beautiful, different to replace irnts that's your pick? >> and the other house, if you're talking about a nongeneric house, it's a problem. it's a manly mansion. so how many men out there are buying houses alone? not so many. the men pay for it, but the women drive it. sorry, not a sexist.
>> just a reality. it looks like the pious pad has won, 54%, manly digs 46%. >> robert frank didn't vote enough then. he absolutely wanted the manly digs for his ferrari. >> that seems fitting. thank you so much. >> thank you. let's get back to the markets. of course they've been on the move a lot today. brian, what are we seeing? >> we're seeing the markets come back a big. down still 61 points, but were down triple digits earlier on. also gold, oil, moving on the attack, and ukraine, or at least reports of one. we're going to get the political and stock market perspective, plus the latest from a reporter who is actually in the donetsk region of ukraine. what is he hearing? right after this. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading.
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composite. actually now is positive. what in the world is going on. i have no idea, but luckily we have somebody who probably does. he joins you. what's going on? >> well, brian, what i think we have is very typically when you get some bad news or worsening of a situation, the market does a knee-jerk reaction, quicker at digesting things than ever before. a lot of that has to do with technology, the accept nation of information people want to be long, and you've got a 2.33% last time i looked at the ten-year, what does that say? that says equities. we did a screen of the s&p a few minutes ago. companies over 15 billion in market value had different over 2%. there's got to be something good in there, right? >> it sounds like it, but i'm going to see your stats and i'm going to call. i ran a sort this morning.
15 s&p 500 stocks are also now trading with trailing pes above 100. >> i heard that this morning. in fact when you mentioned that -- >> i know it's trailing, but it makes me nervous. tell me why at 2500 points above the peak pre-recession we're not overvalued. >> i look at the trailing multiple for the brought average, and it is about 17.5 times trailing. we were at a peak on june 23rd of about 18, three times trailing, so that's far from 100 times trailing. those stocks are likely the hot names expected future growth, spectacular. that draws the hot money crowd. >> with everything going on politically, it's easy to get lost in the headlines. i'm bring it back to our viewer, our listener that is just wondering, they're not a trader,
they're not running a hedge fund. they're in the car, what do i do with my 401(k)? what do i do? >> i would say be diversified, selection overweight in equities at this point. i would want to be well represented in large caps and in mid caps in particular, with a smattering of small caps, because they've been coming back lately. in fact for august, mid cap and small caps are actually outperforming the s&p 500 as of just a few minutes ago. >> john, thank you very much for bringing rational thought to the set, which i do not. mandy also does. >> always looking for rational thought around here. let's get you up to date, ukraine saying it destroyed russian vehicles that it crossed the border. russia says the vehicles were patrolling the area, but did not cross the border. "new york times" reporter andrew cramer joins you on the phone from donetsk, what is going on,
andrew? >> thank you for having me on. i'm not sure i can provide you clarity. there were eyewitnesses in the western press corps who saw armored vehicles across the border from russia into ukraine last night, and then today, as you mentioned, we had a statement from the ukrainian position saying some vehicles from russia had been destroyed. this is all part of a very confused and geopolitically importance situation on the ukrainia ukrainian/russian border right now. >> moscow is accusing kiev of trying ining to abtaj. >> to the best of our knowledge, the white column of white trucks are indeed carries food, medicine and sleeping bags, but they're in a way also -- the
concern is that they're camouflaging some military intent or strategic intent on the part of the russian in eastern ukraine, that this is really a trojan horse, a gift to the ukrainance that bears some danger inside of it. the concern is not so that there would be weaponry inside the trucks, but placing 260 large trucks with russian drivers on this very hot and confusing battlefield around the city of luhansk would clutter up the ukrainian advance and may halt it, or could end up damaging the convoy and provoking the russian invasion. across the border. >> andrew, thank you very much for the update. feeling nervous about your port follow heading into the weekend? you wouldn't be alone, but we have some stock picker to give you some hopefully worry-free advice. do stay with us here on "street
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of our low. we have had a huge swing today. positive morning. negative on the ukraine headline. trying to come back. the nasdaq is positive. let's get some more actionable advice as we head into the weekend and bring in tim and brent. ted, give us one or two of your best picks for our viewers as they head into the weekend. >> well, i think that you need to stick with a long-term good growth story like apple computer. also a defensive story like ultra might do you some well given the turmoil in the ukraine/russia. >> how much does that influence your stock picking? would you say i need to reduce my apple? >> no. it doesn't. we're long term investors. if you don't need the money in the near term we're going to stick to it and ride it out.
we're diversified. >> you know what, let's check our emotions for a second and put them on the side. when we have seen dips so far this year whether it be on geo politics or something else it's usually a buying opportunity. what would you buying? >> i would be looking at companies safe. you're right. it's an emotional time right now. and what happens is that those high flyers can hit. they'll go down 15%, 20%. but the price of cash flow ten times, 83%. good balance sheet. inventory. i checked those. that's good. here's a company that paid nine times earnings for might go down 4%, but 5%. but not as much as other companies and i think this company is worth $50 a share. you got to look at the companies with strong values. >> year to date it's already up
44%. you're saying it could have sdwooit quite more gains from here? >> 90 days ago, things for this company keep getting better. you're only paying nine times earnings. i heard brian at 100 times earnings. this thing is on sale. it's great. >> above 100 trailing. ted, back to you. boeing, another stock well above even its prefinancial crisis high. we have got an order backlog built in and make the case for boeing. >> you know, they've gone from building that backlog to actually building planes. if you look in the history of all the successful planes, a lot of money was to be made. we think the 787 is a once in 100 year plane that's a going to
do well and make boeing's earnings not only defensive but make them grow into the future. we think at 17, 18 times earnings boeing is a real value. they're clearly working in the best interest of shareholders. >> and you have also got a transportation stock. general motors for obvious reasons. down about 17% year to date. by saying this is in your pick list and going to shield you from what's happening overseas. you think its problems are behind it? >> yeah. i'm excited about this company. i have a hard time sitting down. it's so great. a price to book, 1.5. everybody is so concerned about the recall. that's this year. just think about going forward with this company. 2014 the earnings are estimated to be $2.37. look at 2015. $4.56.
i think this company is worth twice what it's trades at right now. might take a couple years but a great company. nice balance sheet. growing sales. problems right now but this reminds me of the mercks of the past. 12 months down the road their up 50%, 60%. gm great time to be buying it at these levels. it's a very strong business. >> double your money in gm. thank you very much. we're one hour and four minutes away from the close of a wild trading day. we're going to check in on the markets and have our standout stocks of the week as well. brian has his pick and i have my pick coming up next. ok, why's that? no hidden fees, from the bank where no branches equals great rates.
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welcome back. my standout stock this week is macy's. it's considered be many to be a best in class on later. i know mary likes it. but down 4.5% this week after its disappointing results and disappointing forecast and not an usa pishs start to the season. >> when i saw the jcpenney numbers today, i was a fill-in. i said basically is macy's getting jcpenney because of a
pricey ward at the bottom. maybe it's deserved. but all this stock has done is continue today go up, up, up. the name has done fan as the cli well. so giliet sciences is my stock of the week. i took a picture of kelly evans onset. >> we got to focus. >> make kelly smile. there you go. >> okay. smile, kelly, smile. closing bell is coming up with kelly smiling next. >> thank you so much. welcome to closing bell i am kelly evans down here at the new york stock exchange on friday. >> and i am tyler mathison in for bill griffith. looked to be a strong finish to the week for the equity markets. through late morning when ukraine claimed it had destroyed a part of a russian convoy that crossed the rd